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[2010] VSC 321
Supreme Court of Victoria
2010-08-09
WHELAN J
Original judgment source is linked above.
CRIMINAL LAW - Sentence - Dishonestly obtaining property by deception - Share registry fraud - Reduced culpability due to subordinate role in offending - Mother of six children with no prior convictions - Two sons and husband suffer autistic conditions - Exceptional circumstances established - Sentence of three years imprisonment, non-parole period of one year.
1 Rachel Maree Cowen, on 29 March 2010 a jury found you guilty of dishonestly obtaining the Australian listed shares of G H Kluge & Sons Limited by deception, by falsely representing to Computershare Investor Services Pty Ltd that you had authority to sell all of G H Kluge & Sons' Australian shareholdings.
2 The maximum penalty for this offence is 10 years' imprisonment.
3 On 16 and 19 April 2010 and on 20 July 2010, I heard a plea in mitigation on your behalf.
4 The circumstances of your offending can be summarised as follows.[1]
5 On 24 June 2008 you attended at the offices of Computershare, which acts as the share registry for a large number of Australian publicly listed companies. You had with you 33 share transfer forms purportedly signed by an officer of G H Kluge & Sons as transferor. The transferee named on those forms was you. You also had with you an original letter of authority purportedly from G H Kluge & Sons dated 15 June 2008. That original letter was copied that day by Computershare staff and then returned to you by post at your request.
6 The 33 share transfer forms had been completed with all of the particulars which are necessary to effect a transfer. Each form contained correct details in relation to each individual shareholding. Most importantly, each form contained the correct shareholder registration number. You had obtained these details, including the shareholder registration numbers, from a Computershare staff member prior to 24 June 2008 relying on the purported authority constituted by the letter dated 15 June 2008.
7 The 33 transfers and the letter of 15 June 2008 were concoctions. You had no authority from G H Kluge & Sons. G H Kluge & Sons' true office-bearers had no knowledge of you or of the transfers which you submitted to Computershare that day.
8 Computershare proceeded to process the transfers. Once transferred, you arranged for the shares to be sold. The proceeds of sale, amounting to $15,685,031, were credited to your personal bank account. From that sum you remitted amounts totalling a little over $4,500,000 to accounts in the United States of America in the name of another person involved in these matters, Raul J Mari. You remitted $6,000,000 to an account in the USA in the name of "American Australian Investment Group", and you purchased a property in Australia on behalf of the company American Australian Investment Group Pty Ltd for the sum of $630,000. You and Mr Mari are the shareholders and office-bearers of the Australian company American Australian Investment Group Pty Ltd. In your trial you gave evidence to the effect that there was also an American company called "American Australian Investment Group" of which Raul Mari and your husband, Roger Cowen, are or were directors. There was no other evidence about this American company. For the purposes of sentence, I accept your evidence on that issue. The balance of a little over $4,500,000 was retained by you in Australia, and was used by you to purchase a home, furnishings, and household goods and toys for you and your family; to make substantial donations to your church; to purchase another property; and to make other dispositions.
9 Your remittances of funds to the USA were restrained in some manner which was not made clear in the evidence. In response to that situation you wrote a letter on the letterhead of American Australian Investment Group Pty Ltd dated 9 July 2008. Your evidence at your trial was that this letter was dictated to you by Raul Mari over the phone and that you then faxed it to the bank in the United States to which you had remitted the funds. The letter is inconsistent with the proposition that at that time you believed you were acting on behalf of G H Kluge & Sons. Amongst other things the letter states, referring to the money you had remitted: "this money is from a large portfolio of shares that I decided to sell and invest the money in property in America". The letter refers to American Australian Investment Group Pty Ltd as a corporation "in Australia and America with the same name", and it refers to the funds as "our money".
10 In finding you guilty of the offence of obtaining property by deception the jury must have been satisfied beyond reasonable doubt that you either knew the purported authority from G H Kluge & Sons was false, or that you knew it was probably false and did not care whether it was true or false.
12 According to the evidence of a forensic psychologist given at your trial, Mr Bernard Healey, you are a person of "dull" intelligence with an IQ on testing of 85. In a report that was tendered on your plea, he expressed the opinion that you do not have the intellect to operate a sophisticated business scheme unassisted and that you have a tendency to be easily influenced and place undue trust in people of "questionable motives". Evidence was given at your trial and on your plea to the effect that you have been influenced by others on occasions other than those the subject of this proceeding in a manner which can be described as exploitation. For the purposes of sentence, I accept this evidence.
13 You became aware of G H Kluge & Sons' shareholdings in Australia as a result of activities you undertook in the course of a small business which you conducted under the name "Recovery Plus Australia". The business was referred to at the trial as a "money finding" business. It involved locating and recovering unclaimed dividends and other payments and earning a commission in the process. You set up your business using a kit which you had purchased after seeing an advertisement for it in a magazine.
14 Raul Mari is a person you met through the internet. According to your evidence at trial, which I accept for these purposes, you first met him when he alerted you to an internet fraud of some kind of which you were a victim, or potential victim. He resided in Florida in the USA. Whilst the two of you never met, your contact with him by phone, by email and through internet calls (SKYPE) was extensive. You had some initial success in your money finding business and, upon being told of that, Mr Mari became involved in that business as your American partner.
15 The first dealings which you and Mr Mari had concerning G H Kluge & Sons concerned another share registry company, Link Market Services Limited, and related to amounts owed to G H Kluge & Sons by Burns Philp & Company Limited and by Orica Limited. You succeeded in obtaining a cheque in the sum of $26,972.78 from Orica Limited, which was an unclaimed dividend to which G H Kluge & Sons was entitled. To obtain that cheque you relied upon a false letter of authority dated 15 January 2008, which was not dissimilar to the letter of authority dated 15 June 2008 upon which you relied in your later dealings with Computershare.
16 In the evidence you gave at your trial you maintained that the false letters of authority and the false transfer forms were sent to you by Raul Mari. There was evidence at your trial which supported your evidence in this respect and, for these purposes, I accept that aspect of your evidence.
17 You also maintained in your evidence that you always believed your authority was genuine and that in all of these dealings you relied utterly upon Raul Mari who you trusted completely. The prosecution went to the jury on the basis that they should reject this aspect of your evidence and should find that you knew that your purported authorities were false, or that you knew they were probably false and did not care whether they were true or false.
18 You were also charged with a count of obtaining property by deception in relation to the Orica Limited cheque. The jury found you not guilty of that count and I proceed on the basis that you are innocent of any criminal wrongdoing in relation to that matter. On the count concerning G H Kluge & Sons' shareholdings the jury must have been satisfied beyond reasonable doubt that you knew your authority was false or you knew it was probably false and did not care if it was true or false.
19 For the purposes of sentence, my findings on the circumstances of your offence are these:
(1) You were not the instigator of the fraudulent scheme. You were not the person who signed the false authority or the false transfer forms purportedly on behalf of G H Kluge & Sons.
(2) You are a person who can be easily influenced and who has a tendency to place trust in people to your detriment. In this instance you were influenced by your American partner, Raul Mari.
(3) For a time you did genuinely believe that you had G H Kluge & Sons' authority to act on its behalf, but a point was reached where you realised that the authority was probably false and, under Raul Mari's influence, you proceeded with the transactions concerning G H Kluge & Sons' shareholdings anyway.
(4) You retained for yourself at least $4,500,000 from the proceeds of sale of the shareholdings. On one view, Raul Mari also received approximately $4,500,000 personally, and the two of you retained control of the other $6,630,000 through corporate entities. In the circumstances I am not satisfied beyond reasonable doubt that you consciously retained for yourself more than the sum of a little over $4,500,000 which was retained under your personal control.
(5) Almost all of the proceeds of sale have been traced into bank accounts, properties and other assets in Australia and the United States of America. I have made a forfeiture order in relation to the Australian assets and a compensation order against you. Whilst G H Kluge & Sons will have been put to considerable inconvenience and expense, the probability is it will not suffer a very significant financial loss. The eventual loss (if any) may not be borne by G H Kluge & Sons.
20 You are a 35 year old mother of six children. You have no prior convictions. Your husband is supportive and has been present in Court throughout your entire trial and your plea. Your children are: Joshua (12), Samuel (10), Joanna (9), Rebekah (8), Tamara (6) and Elijah (5).
21 You were born in New Zealand and trained there as a primary school teacher. You moved to Australia in 1997 where you met and married your husband. You only ever worked as a primary school teacher at one school, and then it was only for a short period. Your evidence, which I accept, was that your training in New Zealand was academically limited and that when working as a teacher you found you were not able to meet the academic needs of primary school students at level 5.
22 You are a committed Christian. You are, and have been, a member of Christian churches or communities. Evidence was led, which for these purposes I accept, that your vulnerability to influence has led to you being financially exploited in that context in the past. On your plea I heard evidence from two senior ministers of your current church and from another member of that church. They all spoke very highly of you, but they all also referred to what they see as your high levels of dependence and vulnerability. I also heard evidence from a restauranteur friend of yours, from the headmaster of the primary school attended by your two eldest sons, and from a psychologist who has assessed your husband. You gave evidence yourself on the plea, and a number of documents were tendered. You gave an undertaking on oath to give evidence against Raul Mari, who, I was told, is in the United States in custody in relation to other matters.
23 The single issue of greatest significance which arose on the plea concerns your family situation, and in particular your eldest two sons, Joshua and Samuel.
24 Your counsel tendered several documents prepared for the purposes of Joshua and Samuel's schooling.
25 In a report dated 27 August 2008, Dr David Cutting states that Joshua has Asperger's Syndrome which forms part of the Autism Spectrum Disorder. He was first diagnosed with the condition in 2006. Dr Cutting cites psychological assessments which place Joshua in the borderline level of intellectual functioning. Reports from three psychologists, Fiona James-Allan, Laraine Monaghan and Melissa Berke, each outline the manner in which Joshua's condition manifests itself at school. He has particular difficulty in socialising with other students. It appears each report was connected to additional funding the school receives to support Joshua. Ms James-Allan's report, written in June 2009, states that the challenging and aggressive behaviours Joshua exhibits "occur regularly and place Joshua and himself at risk as well as those around him". Ms Monaghan's report, written in August 2007, refers to earlier testing that assessed Joshua's full-scale IQ at 80. All three reports conclude that Joshua requires a high-level of support at school.
26 In a letter dated 19 June 2009, Dr Brian Conway diagnoses Samuel with Autism Spectrum Disorder. In a subsequent letter dated 13 July 2009, Dr Conway alerts the school to Samuel's need for ready access to toilets to accommodate his Enuresis (wetting) and Encopresis (soiling) conditions. A report from psychologist Melissa Berke details how Samuel's autistic condition manifests itself. While it appears he is not as aggressive as Joshua, Samuel presents a safety concern to himself and other students and suffers low self-esteem.
27 As I mentioned earlier, the principal of Joshua and Samuel's school, Frederick Hess, gave evidence on the plea. Mr Hess said that Joshua has academic difficulty and that he currently functions at a Grade 1 or Grade 2 level. He said Joshua reaches secondary school age next year and it is yet to be determined whether he would attend a normal secondary school, a special school, or if he would be home-schooled, the latter being something you had undertaken for a period in 2009. Mr Hess referred to each boy's Autism Spectrum Disorder and said that the difficulty each experiences in interacting with other students and staff is different: Joshua is more aggressive and Samuel is more withdrawn. Mr Hess described your bond with Joshua and Samuel as "very close". He said that getting each boy to work and interact with other children had become more difficult following your arrest.
28 When giving evidence on your plea you referred to the fact that your husband Roger might also suffer from Autism Spectrum Disorder. At that time he had not been assessed. During an adjournment of the matter I received a report from the psychologist, Edwin Kleynhans, who had assessed Roger Cowen. Mr Kleynhans gave oral evidence on 20 July 2010 and was cross-examined.
29 In Mr Kleynhan's opinion your husband, Roger Cowen, also suffers Asperger's Syndrome as part of the Autism Spectrum Disorder. Mr Kleynhan concludes that your husband's condition will cause him considerable difficulty in managing the household as a sole parent in your absence. He agreed that with support Mr Cowen could perform the day to day functions and activities of a parent, but he made it clear that he anticipates significant problems and conflict between him and his two sons who have the same disability. Mr Kleynhan said he felt it would make a significant difference if your incarceration was confined to a period the end of which the children could foresee.
30 On 20 April 2010, I adjourned your plea on the basis that I was not satisfied I had adequate material on which to assess the likely effect a sentence of imprisonment would have upon Joshua and Samuel. I made an order that the Secretary of the Department of Justice prepare a pre-sentence report addressing this issue. On 16 June 2010, I received this report. The report concludes that in the event you are sentenced to a term of imprisonment: "it is probable that Department of Human Services (DHS) would need to intervene on some level". It states that Roger, Joshua and Samuel's diagnoses would make them each of them eligible for case management services provided by DHS. The report refers to the results of an enquiry made with a DHS official. The official indicated that if a custodial sentence is imposed, each of Roger, Joshua and Samuel's cases would be prioritised for assessment to determine what case management services are required. In the event these services are deemed insufficient, or if your husband refuses them, the matter would then be referred to Child Protection to determine if more comprehensive intervention, such as taking any or all of the children into DHS custody, is required.
31 On your behalf your counsel submitted, as he had at the trial, that the "real villain" was Raul Mari. He relied on Mr Healey's report and upon the evidence that was called on the plea. He suggested that matters to be taken into account in your favour included the undertaking you had given to give evidence against Mr Mari; your good character and lack of prior convictions; your manifest distress at the situation in which you now find yourself which, it was submitted, ought to lead me to conclude that there is no significant issue of specific deterrence here; the fact that almost all of the funds have been recovered and that there had been no attempt to hide any of those funds; and the circumstances of your family which were submitted to be exceptional.[2] It was submitted that if you are incarcerated your family will be destroyed. It was put on your behalf that a sentence of less than three years' imprisonment fully suspended for a period of three years would be appropriate in the circumstances.
32 Counsel on behalf of the prosecution submitted that an immediate custodial term of imprisonment was required. It was submitted that this case did not reach the very high threshold required for exceptional circumstances in relation to family hardship and reference was made to a number of the relevant authorities. It was also submitted that the evidence suggested Mr Cowen could cope with the care of the six children with appropriate support. Evidence had been given that the family already receives domestic help equal to 50 hours of work a week and it was submitted that additional support would be available from the Department of Human Services and from the family's church and other friends. Counsel submitted that undoubtedly there would be hardship to the children, and that the children would suffer, but in this particular case the circumstances were not exceptional.
33 Counsel on behalf of the prosecution referred me to sentencing statistics, which I have considered. It was submitted on behalf of the prosecution that the range of appropriate sentences, if exceptional circumstances were not established, was a head sentence of between four and a half and six years with a non-parole period of between two and a half and four years. If exceptional circumstances were established, it was submitted on behalf of the prosecution that a reduction in both the head sentence and the non-parole period of six months would be justified and that the adjustment might properly be even greater than that.
34 Leaving to one side for the moment the situation of your family, I accept that all of the matters put by counsel on your behalf on your plea are to be taken into account in your favour. The circumstances of the offending and, in particular the amounts involved, would, even taking all of those mitigating matters into account, require the imposition of a substantial custodial sentence.
35 The difficulties which your family will suffer as a result of your incarceration will make any period of incarceration more burdensome on you, and I take that into account in your favour. Otherwise, I can only take the effect your sentence would have upon your family into account if I am satisfied that the circumstances are exceptional.[3] This is a high threshold to satisfy. The authorities illustrate that it is only in rare and extreme cases that exceptional circumstances exist.[4]
36 For the following reasons, I am of the view that yours is an exceptional case:
(1) The autistic conditions of your two eldest sons, Joshua and Samuel, make them particularly vulnerable dependants. Based on the documents tendered on your plea and the evidence of Mr Hess I am satisfied that their significant behavioural problems are likely to be exacerbated by your separation from them. Each child requires a significant amount of support. Until now much of that support has come from you.
(2) In addition to Joshua and Samuel, you have another four children, all under the age of ten.
(3) Your husband has the same disability as Joshua and Samuel. His condition will make the task of being a sole parent to six children very difficult. I accept Mr Kleynhan's evidence that significant problems are likely to be experienced in the relationships between your husband and Joshua and Samuel.
(3) Your family has received and is likely to continue to receive support from your church and elsewhere, but there is a limit to what can be expected of people outside the family.
(4) Your removal from the family should prompt some level of intervention by the Department of Human Services. While removal of the children into the custody of the Department would be a last resort, I do not consider it unforeseeable in the circumstances. The likelihood that such an outcome would have a very detrimental impact upon your children, particularly Joshua and Samuel, is high.
(5) The possibility of removal, and the impact of your incarceration on Joshua and Samuel, will be reduced if the period of that incarceration is limited to a period, the end of which can be foreseen by your husband and children.
37 These circumstances are exceptional. I consider that the likely impact a sentence of imprisonment will have upon your family is an important factor. The seriousness of the offence requires that your sentence include an actual period of custody, notwithstanding the likely effect upon your family. But on the basis of this factor I have moderated the sentence to be imposed and I have substantially reduced the non-parole period which I would have otherwise imposed.
38 For the offence of dishonestly obtaining property by deception, I sentence you to three years imprisonment, and I fix a non-parole period of one year.
[1] I am bound to sentence the offender on a factual basis which is consistent with the jury's verdict. Otherwise, in relation to matters adverse to the offender, I must be satisfied of those matters beyond reasonable doubt, but I may take into account matters in her favour which are established on the balance of probabilities: R v Storey [1998] 1 VR 395 at 369; R v Olbrich (1999) 1999 CLR 270; R v Cheung [2001] HCA 67; (2001) 209 CLR 1; and R v Ramage [2004] VSC 508 at [25].
[2] The plea hearings straddled the handing down of R v Markovic [2010] VSCA 105. A submission as to family hardship as a basis for mercy even if exceptional circumstances were not found, which was made in April 2010, was retracted on 20 July 2010.
[3] R v Markovic [2010] VSCA 105.
R
Cowen [2010] VSC 321
(1999) 1999 CLR 270
(2001) 209 CLR 1
(1969) 119 CLR 257
(1976) 14 SASR 291
(1977) 16 SASR 155